Reserve Bank of India’s (RBI) three-month deadline given to banks for severing their ties with digital currencies is approaching. This has caused some cryptocurrency exchanges to pack their bags to shift the base abroad, so as to evade the regulatory crackdown. The RBI, on April 6, banned the commercial banks from having business relations with the entities that deal in virtual currencies. They were instructed to end the relations (if any) within three months that will lapse on July 5.
Many cryptocurrency business in India filed a petition against RBI’s order in the high court, however, that didn’t result in any kind of relief. The next hearing is due on July 20th at the Supreme Court of India. This has put India’s cryptocurrency ecosystem is in a worse dilemma as this hearing date falls two weeks after the RBI deadline to close down all crypto-related bank accounts.
According to a news coverage by Quartz, now Indian cryptocurrency exchanges are rather open for a regulatory framework on cryptocurrency which will allow greater transparency, and take more measures to safeguard customers, rather than a ban on cryptocurrency dealings as authorized by the Reserve Bank of India (RBI).
Anirudh Rastogi, managing partner at legal firm TRA Law, which filed the supreme court petition for four exchanges at the court against RBI said,
“A ban is counter-productive, therefore, we have suggested that there should be appropriate regulations that can address the government or the central bank’s concerns,”
The bitcoin exchanges have requested the RBI to remove the blanket ban, saying the regulator should instead enforce it only on firms violating the norms.
One of the petitioners in the case told Quartz, requesting anonymity,
“We already follow the strict know-your-customer (KYC) and anti-money laundering (AML) guidelines and we have detailed that out in the application (to the RBI). Plus, we have also suggested measures that we are ready to take to improve the KYC-AML norms, such as including passport details as well. We are also ready to take any suggestion that the regulator has to offer that can address their concerns.”
Another suggestion that the above mentioned petitioner mentioned was adopting international best practices, including allowing financial products such as cryptocurrency insurance.
“These are to be taken up by the exchange and adds a layer of surety and customer protection in case of any mishap. All this can happen only if we come under a regulatory purview,”
Other firms like KDEPL (Kali Digital Eco-systems Private Limited) have asked for an extension on the deadline. According to an application submitted by KDEPL,
“Considering the next date of the hearing in the supreme court is after July 06, 2018, KDEPL (Kali Digital Eco-systems Private Limited) requests your good office (RBI) to extend the time of three months granted in the captioned circular to at least Aug. 31, 2018,”
KDEPL was among the first to mount a legal challenge against the RBI in the Delhi high court in April. Subsequently, the case was bunched together with other similar challenges and will now be taken up by the supreme court.
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